Hedge Fund Sentiment Is Stagnant On Town Sports International Holdings, Inc. (CLUB)

We view hedge fund selling in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Nine Chapters Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Wallace Capital Management).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Town Sports International Holdings, Inc. (NASDAQ:CLUB) but similarly valued. We will take a look at Ion Geophysical Corp (NYSE:IO), Global Power Equipment Group Inc (NYSE:GLPW), S&W Seed Company (NASDAQ:SANW), and Ocera Therapeutics Inc (NASDAQ:OCRX). This group of stocks’ market caps is closest to Town Sports International Holdings, Inc. (NASDAQ:CLUB)’s market cap.

As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $24 million in Town Sports International Holdings, Inc. (NASDAQ:CLUB)’s case. Global Power Equipment Group Inc (NASDAQ:GLPW) is the most popular stock in this table. On the other hand, S&W Seed Company (NASDAQ:SANW) is the least popular one with only 5 bullish hedge fund positions. Town Sports International Holdings, Inc. (NASDAQ:CLUB) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Global Power Equipment Group Inc (NASDAQ:GLPW) might be a better candidate to consider a long position.